Why Are Ping An, ZhongAn, Alibaba, and Starbucks Opening Up Their Tech Stack as B2B Offerings?

A few months ago, I wrote an article on B2B FinTech and said that the year 2019 is set to be the year B2B FinTech witnesses a strong growth. Little did I know it would happen so soon – that it would attract large B2C FinTechs (or TechFins as some of them are called) to offer B2B propositions. But before we go there, let's talk a little bit about the recent move by Starbucks on the lines of Amazon. At MEDICI, we’ve been tracking Starbucks for 5+ years now for more reasons than just coffee (there is one next to our office). In 2014, we wrote a piece on how licensing its mobile payments system might be on the Starbucks menu. Now, in 2019, it’s finally happening. We expected the same trend in FinTech with scaled-up players – and that’s happening as well. We’ll come back to that later in the article.

Let’s talks about Starbucks’ B2B adventure. Recently, Starbucks struck a deal with restaurant tech company Brightloom (formerly eatsa), licensing portions of its mobile and loyalty technology for building a new, cloud-based SaaS platform for the restaurant industry. The deal is reminiscent of AWS, Amazon’s popular cloud service offering, as components of the software IP developed by Starbucks for ordering, loyalty, personalization, and payments will be leveraged for the platform.

Over the past few years, we have been increasingly witnessing a pattern shift in the business approach of TechFins such as Ping An, ZhongAn, and Alibaba as they are expanding or foraying into B2B – just as Amazon decided to open their tech stack to the world in the form of AWS. It’s clear that this is going to be a mega-trend, but the question you should be asking is: why is this happening now?

The rise of B2B has been a long time coming and is an exciting turning point in the FinTech as well as the TechFin saga. FinTech has become one of the hottest sectors in the tech world globally, but the wave so far has largely been dominated by B2C startups. Alipay and the likes solved the needs of hundreds of millions of customers in China and built trust with them for P2P & P2M payments as well as other financial services. B2B is a very different game though: it requires you to develop software to solve the problems of other corporates and enterprises. The traditional B2B approach was to build software for enterprises from scratch after understanding their problems – it was an iterative process. What Ping An, ZhongAn, Alibaba, and Starbucks are doing now is quite different. They are basically putting out the tech stack that they had built for themselves (to offer consumer propositions) and asking other enterprises to use it if they want it – and it seems to be selling. And that too, for all the right reasons as these platforms have been tested over time – and they offer some of the finest financial services experiences in the world.

Embracing Transformation: From B2C to B2B

So far, many large FinTech companies, especially TechFins, have conventionally focused on the retail banking segments and a B2C approach. TechFins Alibaba, Ping An, and others have spent years working on and developing their own proprietary technologies – tech that they have always previously guarded closely as an industry secret. Billions and billions of dollars have been spent towards developing such tech, and now, as more businesses (banks, FIs, and corporates) seek to license existing tech rather than build their own, it’s the perfect storm to go B2B.

We have witnessed a shift in the business strategies of such TechFin players and observed how they have been expanding into B2B models as well, providing businesses with their proprietary tech. Among these, some B2C companies in particular – like the ones we’ve listed above – have stood out for their efforts in the B2B space. So, what are some of the **offerings and associated products these companies have come up with to compete in the B2B arena? Let’s take a look:

Ping An: Established in China in 1988, Ping An is a company that provides customers with a range of financial products and services that include insurance, banking, and investment. Ping An’s FinTech subsidiary ‘OneConnect’ provides SaaS solutions across AI, blockchain, cloud computing, and biometrics to small and medium-sized financial institutions.

  • In under four years in China, OneConnect has worked with thousands of financial institutions, including 590 banks, over 2500 non-bank FIs, and close to 80 insurance customers, providing them with digital solutions to improve their tech capabilities.
  • Since 2018, OneConnect has been establishing strategic partnerships with banks and NBFIs in the APAC region.
  • For instance, in the Philippines, OneConnect has partnered with FinTech UBX, a subsidiary of UnionBank, to co-create a blockchain-enabled digital platform and host of solutions for MSMEs.
  • OneConnect is also expanding its footprint across countries in the region like Japan, Thailand, and Malaysia.

ZhongAn: ZhongAn, a Chinese online-only insurance company, was established in 2013. Its subsidiary, ZhongAn Technology, was established in 2016.

  • ZhongAn Technology is a FinTech company working on tech R&D in the areas of blockchain, AI, big data, and cloud computing, among others.
  • It provides technology products and solutions for inclusive finance and healthcare, supporting companies with their innovation and business incubation efforts. Business Insider reported that in the first half of 2018, the company provided services to approximately 300 corporate clients through its business lines. We’re well into 2019 now, and that number is sure to have increased.
  • The company has developed its own Blockchain server called Anlink, towards the goal of facilitating the further growth of the insurance industry.
  • ZhongAn Technology is a part of the Shanghai Blockchain Industry Development Research Alliance, which is China’s first Blockchain-focused agency, to develop applications. ZhongAn has also established the Fudan-ZhongAn Blockchain & Information Security Joint Laboratory.

Alibaba: Based out of China and founded in 1999, Alibaba is one of the world’s largest companies. It specializes in the areas of e-commerce, retail, Internet, and technology. Through its various subsidiaries, Alibaba provides companies with the technology infrastructure and marketing reach to help businesses to engage with their users and customers and operate in a more efficient way. Alibaba’s businesses are made up of core commerce, cloud computing, digital media and entertainment, and innovation initiatives. In 2004, Alibaba launched Alipay, a third-party mobile and online payment platform.

  • Alibaba launched its A100 program this year, which was built on what the company calls the ‘Alibaba Operating System.’ This tech infrastructure is capable of processing massive amounts of data, which lets it offer brands insights and analytics that can help companies further grow their business.
  • Through the A100 initiative, companies of all sizes can choose from an entire range of services to enhance their business operations.
  • To operationalize this, Alibaba is going to establish a cross-platform-integrated account-serving team, beginning with companies that already exist within their ecosystem. Going forward, A100 intends to expand to serve other companies as well.

Why now?

Banks don't want to be left behind – there is a time-to-market pressure. And building 3-1-0-like products (Alibaba’s lending innovation) is not easy. Due to the proliferation of the API-driven approach, it is easier to build products by leveraging existing tech stacks compared to building one from scratch.

Furthermore, TechFins – like the ones above – have understood that embracing a B2B approach not only helps to bring in added revenue but can also help them gain access to a wider customer base through co-branding opportunities. On the other hand, this approach provides a tech advantage to corporate customers (banks, insurers, etc.), especially in developing markets. It’s very clear that we are standing on the cusp of a mega-trend among TechFins expanding into the B2B space. This comes at a time when B2B FinTech startups are growing rapidly and mushrooming in numbers.

Earlier this year, we wrote about how (although B2C FinTechs were everybody’s darling traditionally) the emergence of new technologies, changing market landscapes, regulatory scenarios, and other factors are playing an important role in the surge of B2B FinTech funding globally. Against this background, we also discussed the manner in which the growth of FinTech funding for companies in the B2B space has been experiencing an upward trend with recent analyses finding enterprise financial services & integration, online financial services, enterprise financial software, and Software-as-a-Service (SaaS) risk management as some of the hottest spots for investors this year. TechFins seem to be following this positive trend by expanding into the B2B space. It’s likely that the horizon is already behind us and we’re in the thick of it at this very moment.

Do you know of other B2C companies that have been moving towards B2B models with a focus on FinServ? Do write to us and let us know! In the meanwhile, we will keep following the latest developments in this space and bring you more on this in a follow-up story soon.